Year will be critical for M&M Two Wheelers: Pawan Goenka

Losses, fall in volumes forecast a difficult year for the company

Weighed by losses, Mahindra Two Wheelers, one of the smallest two-wheeler companies in India, has a crucial year ahead with monthly volumes lagging their original targets.

Despite launching new motorcycles and scooters, jointly aided by a robust marketing and distribution program the company has been able to clock overall volumes of only 15,000 units per month as against the targeted 30,000-35,000 units per month.

Pawan Goenka, executive director, Mahindra & Mahindra (M&M), said, “This is a very difficult year as volumes did not go up to the level that we were expecting. Now, we think we have a good portfolio of the Centuro and Gusto, both products are now well accepted but we need to see a ramp up happening and it is going to be a very critical year for us to get the two-wheelers into a reasonable volume level — say, 30,000 to 35,000 vehicles sold a month.”

Having entered the two-wheeler space through the acquisition of business assets of Kinetic Motors nearly seven years ago, M&M continues to be a fringe player in the market dominated by Hero Motocorp, Honda Motorcycle and Scooter India and Bajaj Auto.

Domestic market share of Mahindra Two Wheeler, which sells three motorcycles and six scooters, stood at only per cent by the end of February, with a volume fall of 16 per cent in the April-February period compared to the same period a year ago. The industry meanwhile reported a growth of nine per cent in the same period, as per data provided by the Society of Indian Automobile Manufacturers.

When Goenka took charge of the two wheeler business around this same time last year, he laid out a vision that included churning out two or three high-volume products, each generating 30,000-35,000 units every month. Annual sales target of at least 1 million units, including 100,000 units from exports. The company also promised one new model or variant every quarter.

Addressing analysts, he said, “So the thing to watch out for is are we reaching 30,000-35,000 volume per month. Without that, in this industry, one cannot really get a financial performance without getting to 0.5 million volume going up to 1 million. I am on record saying that we need 1 million volume. This year, it is important for us to get 30,000-35,000 units.”

The company positioned the entry-level motorcycle Centuro, which saw some consumer traction during the initial year, at the center of all the product development. Further variants of the bike were launched in due course but increased competition from Bajaj Auto, Hero Motocorp and Honda impacted demand.

Gusto, M&M’s first automatic scooter developed entirely by the company, has also unperformed. Monthly volumes of M&M’s scooter portfolio stood under 4,000 units last financial year. India’s largest selling automatic scooter Honda Activa clocks in excess of 150,000 units a month.

As of the last financial year, the company posted a loss of Rs 460 crore as per disclosures made in its annual report.